Turkey vows to ‘assertively’ continue economic reforms

Turkey will “assertively” continue to carry out economic reforms to reinforce its resistance to political risks, the country’s Deputy Prime Minister said on Wednesday.

During his visit to Davos, Switzerland, to participate in the annual World Economic Forum (WEF) meeting, Mehmet Simsek spoke to Bloomberg HT television.

“We have strengthened our economy with reforms since the mid-2000s,” he said. “Hopefully, we will complete the structural and sectoral transformation after 2019.”

“We will overcome the bottlenecks in our foreign trade balance, and the inflation will down to single digits,” Simsek said, noting that the government is very confident about economic reforms.

“Powerful reforms to enhance investment environment and businesses in Turkey will soon be launched,” he added.

Last year, Turkey’s exports reached $157.1 billion in value — the second-highest export volume in the republic’s history with a 10.2 percent annual rise. However, the imports of the country rose by 17.92 percent to $234.2 billion in 2017, marking a $77.06 billion deficit in foreign trade balance.

Saying the Turkish economy has grew 5.6 percent on average over the past 15 years despite the internal and external shocks, Simsek stressed that the fiscal discipline will be continued to keep investors’ confidence high.

Turkey’s economy expanded 5.3 percent in the first quarter and 5.4 percent in the second quarter of 2017. In the third quarter, Turkey’s economy became the fastest-growing among G20 countries, showing double-digit (11.1 percent) growth performance.

“The EU, which has 28 member states with a population of 510 million, created 1.9 million new jobs last year, while Turkey generated itself more than 1.3 million new jobs,” Simsek said, adding:

“This [increase in employment] will have a positive impact on the economy’s growth performance this year.”

As of October 2017, the unemployment rate in Turkey drops to 10.3 percent, down 1.5 point from the same month previous year.

The deputy prime minister also stated that the rise in consumer prices last year was mainly originated from fluctuations in exchange rates and the economy left such shocks behind.

Turkey’s annual inflation rate was 11.92 percent in December 2017, down from 12.98 percent in November. The rise in consumer prices was 8.53 percent in December, 2016.

The average USD/TRY rate was 3.65 last year while one dollar was exchanged for 3.03 Turkish liras on average in 2016.

Upon a question about Turkey’s Customs Union Agreement with EU, Simsek said that he is still optimist about an update in the middle-run, but not in the short-run due to the EU’s irrational acts.

The EU is Turkey’s largest export market, as around half of its export is imported by the EU countries, and nearly 70 percent of foreign direct investment in Turkey comes from the EU.

“We expect EU to show a strong stand against terrorism, which is the most important issue for us,” he said. “Turkey does not want to have any problems with its European allies and trade partners.”

“In the coming period, Turkey will be understood better in its fighting against terrorism,” he added.

Despite not being a member of the EU, Turkey is a member of the customs union agreement since 1995, but this does not cover agriculture (except processed agricultural products), services or public procurement right now.

Turkey applied for EU membership in 1987 and accession talks began in 2005. However, negotiations stalled in 2007 due to the objections of the Greek Cypriot Administration in the divided island of Cyprus, and opposition from Germany and France.

To gain membership, Turkey has to successfully conclude negotiations on 35 policy chapters that involve reforms and the adoption of European standards.

As of May 2016, 16 chapters had been opened and one closed. However, in December 2016, member states said no new chapters would be opened.